AUGUST 8, 2005

Trouble at Mercedes

The recent decision by Jurgen Schrempp is to stand down as DaimlerChrysler chairman, three years ahead of schedule, have had some destabilising influences on the Stuttgart company, not least because the chief executive of Mercedes-Benz Eckhard Cordes appears to have decided to follow Schrempp out of the door. This has yet to be confirmed but all the signs are that Cordes will go and that the new DaimlerChrysler chairman Dieter Zetsche will have to find a replacement. There are various candidates being mentioned including Wolfgang Bernhard, who quite DaimlerChrysler and moved to Volkswagen when he challenged Schrempp's plans for the troubled Mitsubishi Motors. There is also talk that Zetsche might bring in another executive from Chrysler and Joe Eberhardt, Chrysler's sales and marketing, has been mentioned. There is even talk that Jurgen Hubbert might come out of retirement to lead the company.

All the signs are that this will have no effect at all on the Mercedes-Benz F1 programme. Zetsche has a very international background and understands the power of the sport, having been head of Mercedes-Benz do Brazil in the 1980s. He was the force behind Dodge's move into NASCAR and says that the sport is "a perfect fit" for Mercedes-Benz.

However, there are darker clouds around the company with a criminal investigation being launched by the US Justice Department over allegations that in recent years DaimlerChrysler AG's Mercedes-Benz's senior executives may have been aware of bribes being paid to officials in countries around the world.

The Securities and Exchange Commission has been investigating such claims since last year when David Bazzetta, a former Chrysler auditor, alleged in a lawsuit that the company had 40 secret bank accounts and claimed that Schrempp and other senior executives had been briefed about them by Hubertus Buderath, DaimlerChrysler's vice-president of corporate audit in a meeting in 2001 in Stuttgart. The claims were later backed up by a second former employee, Christine Holtzman. Last month Bazetta settled out of court with the company but investigations have continued and there was a further shock last month when Rudi Kornmayer, the longtime chief executive officer of the DaimlerChrysler Nigeria office, committed suicide. In his suicide note Kornmayer is believed to have referred to a bribery scandal.